EU lawmakers agree on tough line against tech companies

BRUSSELS (Reuters) - EU lawmakers agreed on Thursday to take a tougher stance against tech giants such as Google, Amazon and Apple in new legislation aimed at curbing unfair business practices.

FILE PHOTO: The logo of the web service Amazon is pictured in this June 8, 2017 illustration photo. REUTERS/Carlos Jasso/File Photo

A European Parliament committee voted in favor of beefing up draft legislation to force online giants to set up Chinese walls between subsidiaries and to get merchants’ consent before using their data.

The legislation should also give more powers to national authorities to go after rule breakers and include a blacklist of trading practices that are deemed to be unfair, lawmakers said.

The committee now has to reconcile its tougher stance with more moderate proposals put forward by the European Commission, which drew up the draft rules in April and has the backing of EU governments.

The legislation aims to prevent unfair business practices by app stores, search engines, e-commerce sites and hotel booking websites in a bid to ensure a level playing field between the tech companies and traditional businesses.

“We have managed to introduce key improvements to the Commission’s proposal that prohibit unfair practices, remove loopholes and safeguard fairness in the relationships between business users and online platforms. Unfair platform-to-business trading practices have no place in Europe,” Danish center-left lawmaker Christel Schaldemose, the lead parliament negotiator, said.

Schaldemose was behind the proposal to introduce Chinese walls, which targets online marketplaces such as Amazon.

European Competition Commissioner Margrethe Vestager is also looking into how Amazon uses merchants’ data to make copycat products.

Unfair trading practices include retroactive contractual clauses which are detrimental to companies, and clauses which make it difficult for companies to end an agreement with online platforms, lawmakers said.

The European Parliament will now begin talks with the European Commission and EU countries to thrash out a common position before it comes law, unless other lawmakers challenge the committee’s vote at the general assembly next week.

The Association of Commercial Television (ACT) in Europe welcomed the EU lawmakers’ stance.

“We think that this report is a good basis for the trilogue negotiations,” ACT’s Johanna Baysse said.

Tech companies have criticized the proposal, known as the platform-to-business regulation (P2B), for its one-size-fits-all solution to a diverse sector.

“The text adopted in committee at the Parliament today risks damaging the competitiveness of app developers in the EU, and as a result could stifle growth in a sector worth an estimated 63 billion euros ($71 billion) a year to Europe’s economy,” said Morgan Reed, president of U.S.-based ACT | The App Association, app makers’ leading industry body.